think tank or a research initiative to really look at some of this and try to foster innovation in the music industry and try to foster a sustainable musical ecosystem for them. >> host: well, let's -- two questions. number one is when somebody downloads or uploads a tune from itunes, pays $1.99 for one song, where does that go? who gets it? >> guest: so typically in a download from itunes, about 30% of that is kept by apple, 70% is paid out to the rights holders, and that's generally split roughly 10% in the u.s. to the songwriters and music

publishers and about 670% to -- 60% to music labels and the artists they represent. >> host: and the artists themselves, how much of that, how much do they get out of that 70%? >> guest: it depends really on the contractual deal between the record label and the artist. typically, it's 15-25% royalty depending on the negotiating power of the artist, and then there are a variety of deductions that come into, come into play as they are paid out by the record label. there's also recoupment of cost, so often time record labels will charge back the cost of recording an album, other costs of marketing, third party promotion, tour support. it depends on a case-by-case basis, but the typically it's 15-20% of the 70%. >> host: so, professor bargfrede, when -- is this structure, this payment structure, is it set by the

industry and by the interested parties, or does the federal government have a role in this as well? >> guest: ing the federal government plays a pretty big role in the music publishing and songwriter side. regulating rates such as mechanical royalties, the royalties paid for the reproduction of a song or a musical composition, and then on the sound recording side -- and, remember, there's really two copyrights in music. there's the music publishing side which is the underlying words and lyrics and music, and then there's the sound recording which is the recording of that musical composition. on the sound recording side, typically those rates are negotiated on a fair market basis. so some would argue that the song writers and publishers are at a slight disadvantage because they are being regulated while the sound recording side is not. >> host: joining us here in our conversation is jim phillips with communication daily. >> good morning.

professor bargfrede, a lot of the informationing in your report -- information in your report looks at how the industry can work together to advance some of these ideas but, obviously, compromise has been fairly difficult thus far. so to what extent should, to what extent are the recommendations that you're proposing going to require congressional mandates as opposed to industry collaboration? >> guest: i mean, i think in the music industry you see a very fractured industry, and part of that is because there are two copyrights, there's two sides to the revenue split on the publisher side and the record label side. a lot of times you see the two sides ending up in a fight over who gets what particular pie, and there doesn't seem to be a lot of collaboration as to how to grow that pie into a larger size so that everyone's slice is

a little bigger. i think the registerer of copyrights in the u.s. has been pretty active in looking into some of these issues. they put out a 245-page report on music licensing earlier this year, and i think that some of the recommendations she has made have recommended -- have required governmental intervention. i think in other areas there may be a role for an ngo or for a nonprofit to get in and try to play an agnostic role in trying to to help solve some of the problems we highlight in the report, but i do think that, ultimately, congressional activity may be required as well. >> host: professor bargfrede, we recently talked with carrie sherman of the recording industry association of america, the ceo and president, and here's a little bit of what he's calling for when it comes to changes in the music industry. >> guest: we would want to be paid by am/fm radio. i think it's remarkable, most

people are shocked to learn that in today's day and age am/fm radio pays nothing to artists and record labels when they broadcast their music. they do pay the songwriters and publishers, but they do not pay artists and labels. this is a $16 billion industry where they're earning $16 billion in advertising revenues every year from, basically, the use of music, and they pay nothing for i. there's -- for it. there's no other copyrighted work that is discriminated against that way, and there are virtually no other developed countries in the world that discriminate recordings that way. yet special exemption in u.s. law, a unique u.s. situation. we'd want to fix that. we'd want to pix the below market rate standard that siriusxm enjoys. for some reason they were grandfathered at a time when they were a start-up.

that grandfather still exists even though they're making money hand over fist. they ought to be sharing their revenues more fairly with the people who create the music on which their service is based. that needs to be fixed as well. we really need to do something about making sure that all creators are paid fair market value regardless of the platform that they're on. >> host: professor bargfrede, do you agree with carey sherman? >> guest: yeah. i think it's pretty shocking if you look at the trillionized nations -- industrialized nations around the world that are paying or providing this performance for sound recordings, that we don't have it in the u.s. i believe the other countries that are not paying that performance right include china, north korea, iran. but you look at those who are, it's all of europe, it's a lot of latin america be, south america, and here we sit as really the world's wealthiest country, and we're not providing this as a right to our artists.

to me, it's been a little bit shocking that, you know, there's been congressional activity on this pretty much in the last several congressional sessions, and it hasn't moved forward. right now there's a fair play, fair pay act that carey's probably referencing to try to provide that performance right. and i think, uni, -- you know, f you look back over time, generally labels didn't care about not being paid for it because they viewed it as a promotional tool. everyone was happy. but we've shifted now to this era of listening. it's no longer about listening as a product as we've moved to spotify and other streaming services like youtube. we're living in an era of access to music and an era of listening. and in that era, i think that, you know, listening on the radio is another form of listening that should be paid for. >> host: jim phillips. >> should the, a lot of the --

should the issues that are involved with the music licensing industry like what's being addressed in the fair play, fair pay act, should those be detached from the larger copyright act review that the house judiciary committee is considering? a lot of, a number of stakeholders are concerned that some of the wider issues like the placement of the copyright office could get swallowed up, could swallow up concerns within the music try and other industries. >> guest: yeah. i mean, i think there's room to move forward on this immediately. i think that a wholesale rewrite of the copyright act or at least a wholesale revision of the copyright act probably needs to take place. maria has acknowledged that with her report that came out earlier this year, but there's no reason this particular issue can't be advanced, you know, this year. and again, we are the world's

wealthiest country, and it's a right that we're not providing, yet there's a contravening bill in to prevent right from happening. >> host: and what is that bill? >> guest: the it is the local radio freedom act, and it's supported by nearly half of the house. >> host: but at the same time, i think that with that bill and the supporters of that bill argue that, hey, this artist is getting great promotion in this free play. >> guest: ing right. and i think that has traditionally been the argument, and i think that labels and artists have been happy, you know, over the past several decades to be able to sell a cd. but again, we've moved into an era where people are being paid by listens. so if you look at some of the complaints about low streaming rates from digital streaming services, i think some of that comes from the fact that we're looking at a totally different business model and a totally different model for people to consume and listen to music. you're being paid every time

someone listens to your song, not every time someone goes out and buys a product and maybe listens to it once or maybe listens to it a thousand times later. >> host: professor bargfrede, in your rethink music report: transparency and payment flows in the music industry, you call for greater transparency. what do you mean by that? >> guest: well, i think there's really two facets to that. there's what i would call revenue transparency, and then there's what i would call rights transparency. and so revenue transparency is really giving artists and creators, songwriters more insight into where their money is coming from, how those payment flows are making their way to them, who's taking a cut along the middle, what are the rates that are being paid by spotify and other digital services. i mean, i think everyone knows what itunes is paying for a download, it's a little more

difficult to know how that pie being split up by spotify. on the rights transparency side, there's a big issue created by a lack of requirement for copyright registration, and that comes under the byrne convention, the international copyright treaty, that requires for international copyright protection that you cannot require a copyright to be registered. so if i create a song today, i have immediate copyright ownership of that. i'm not required to send it to the library of congress or the rebelling thesterrer of copyrights -- registererover copyrights, but what that means is often times it's difficult to know who owns what copyright. a songwriter may write a song, do a publishing deal, the publisher may subsequently sell that copyright to someone else, and you end up with digital services or anyone else who may want to use that particular musical composition in a place where they may not know who to pay. so that's the other part of this

transparency piece. >> host: professor, when it comes to the payment transparency, is this something new in the past 15 years in the digital age, or has payment to musicians always been a little bit opaque? >> guest: i think, you know, certainly the narrative of artists and songwriters not understanding where their money is coming from is not new. but i think we're living in a world today where everything is trackable. the nsa can know where i am, where you are, what you're talking about on your cell phone. there's no reason that artists and creators shouldn't be able to know where their songs are being streamed and how they're being paid for that. and not on a significant time lag either. i mean, you still have songwriters that are receiving checks from performing rights organizations that may come in -- depending on where in the world the song was played -- they may come in up to 18 months after the listen or the sale

happened. >> professor bagger field, one of your -- bargfrede, one of your major recommendations in the report is to use a nonprofit to meet a global database. how would a nonprofit succeed in this area as opposed to some of the industry efforts that have sort of stalled over time? >> guest: if you look at the european commission, the e.u. tried to create a database roughly between 2008 and 2012. they spent more than ten million euros investigating this, and the project ultimately fell apart. over issues like who was going to pay for it and who was going to put the day into it. and we really believe that bringing in an agnostic ngo that can perhaps bring folks together in order to create a rights database can help to solve that issue. but i think, you know, we also

look at it as something where we try to solve the issue on a go-forward basis. one of the problems in the past has been trying to get folks to agree to give their data on older recordings and older musical composition. what we're saying is today there's 30 million songs available on spotify. the estimate is that in 2025 there will be 100 million songs available for listening on spotify. can we just start to collect and aggregate that rights informs for the 70 million -- information for the 70 million songs that are going to come over the next decade, and is there a role that an ngo can jump in and play and, hopefully, drive a market shift to, hopefully, create some rights transparency but maybe even create a system that leads to greater licensing revenue by allowing more licensing of music because folks can actually find where the music should be licensed from. >> what should the industry's role be in all of this? >> guest: ing i think the, you

know, we at berkeley are considering the possibility of working in a university consortium to develop this ngo, and i think that we want active involvement from all facets of the industry. we don't believe we can move forward without input from the riaa, the mpa, the major publishers, major labels, also independent artists, independent labels. but i think as the e.u. project kind of proved, getting everyone within all of hose stakeholder groups -- those stakeholder groups to agree on every single point is going to be very, very difficult. so, you know, i think we're looking at it as we want folks to be involved, we want folks to provide us with advice. and whether it's berkeley as part of a university consortium or some other ngo that moves forward, i do think you have to have those stakeholder groups

involved. >> host: professor bargfrede, could you just speak to the digital world that we're living in now when it comes to music and how that's changed, how we get our music in the last 15 years? >> guest: yeah. i mean, i think if you look back to, say, 1995, 20 years ago, people would listen to am/fm radio, they would hear a song that became a hit on country or hip-hop or a pop station, they would like it, and they would go down to their tower records, and they would buy a cd. and they would buy a cd for a pretty significant amount of money, you know? roughly $20 for a cd. and i think the music industry became very accustomed to selling an expensive product. there were a lot of people who were also upgrading their vinyl and cassette collection, older music that they had, they were rebuying it on cd, and then that shifted in 1999 when napster came around. and the music industry was fairly slow to adapt to napster.

it wasn't until that steve jobs convinced the music industry that there should be a download store in the form of the itunes music store. and then really we've begun to shift to this music subscription service model. it's not really a new model anymore. it's been around since 2004, 2005 with a more legitimate mapster, there was a yahoo! music subscription service also available at that time. but it wasn't until spotify arrived in the u.s. in 2011 and integrated with facebook so that people could see what their friends were listening to and offered the social component that i think the fans and the customer base began to really be aware of that access model of music. and so now we've moved into this era where, you know, i don't want to say everything is free, but everything feels like free. and i think part of that has been -- and it's something the

music industry's fighting piracy. take a $10 subscription fee or $20 subscription fee in the form of some hi-fi services is and give folks all you can eat access to music. and we're still in a nascent phase, i think. we don't yet know where that's going to end up. certainly, subscription services are growing very quickly. i think they've already announced that the number of streams this year is double the number of streams at this point last year. subscriber bases are up, and i think that you'll really see over the next probably two years where that model is going to, where we're going to end up with that model. >> host: and in your view, what groups or who does the current system benefit the most? >> guest: ing i think that the current system benefits probably major labels and major publishers because they are the ones with the negotiating power.

i think it's an unfortunate reality, but i think that, you know, perhaps the smaller artists just don't have the power that, you know, a major public corporation does when they're negotiating with some of these groups or some of these digital services. >> professor, i was interested in what you had to say on the role block chain technology can play on the future of music rights management. could you explain how that would work? >> guest: yeah. and i'm not going to pretend to be a block chain expert, but i do think it's something that that should be explored. so if you look at concept of a decentralized rights registry that's created by an ngo, having a block chain component to that where the money or the royalties are shared via smart contract on

block chain. for those of you who don't know, block chain is the system that powers clip toe currencies like -- crypto currencies like bitcoin and allows payments to be made and verified across a distributed computer network. and with block chain and music, i think there's a lot of investigation about can you have what's called a smart contract that allows more those royalties to be -- for those royalties to be paid at source. in a hypothetical situation, spotify is connected to block chain, block chain knows who should receive what royalty, and rather than the royalty going from spotify to a major label or spotify to a performing rights organization and then trickling its way down to a writer or an artist, that split is actually made at the point which spotify puts it onto the block chain. >> host: professor bargfrede,

recently taylor swift pulled her music from one of these services. what was the situation? what did she accomplish? >> guest: i think to answer your second question first, i think she certainly accomplished elevating the issue of digital streaming payments to artists and songwriters, and she's certainly not the first person to bring this up. but she very publicly, you know, made a stand against, i guess, what you would call free music. she pulled that music from spotify because she was opposed to this concept of their free service, their free ad-supported service. so she wanted to be able to have her music available on spotify only in the case that the subscriber -- only in the case that the person was actually had a paying subscription. so spotify has two tiers right now, they have a free tier where you can listen to all you want as long as you're willing to

accept some advertising, and then they have a subscription-based service where you pay $10 a month, and you can listen to all the music you want without ads. and she wanted to be firewalled away from the advertising-based service because she felt like it was devaluing music. and, you know, again, i certainly think she elevated the issue and made it very public. my one concern would be whether or not some of the stories that are coming out about payments from digital services are going to actually impact the uptick of those services, and we won't have the chance to see where they can end up if the general public starts to get the idea that, well, i shouldn't pay for spotify because the money doesn't go to the creator anyway. >> host: so for that $10 a month that you spend on spotify, you can listen to taylor swift 24 hours a day if you'd like, correct? >> guest: yes. >> host: and does she get paid for every play? >> guest: she gets paid based on

a revenue share. the per-stream rate differs really each month based on the number of subscribers or the subscriber revenue pool divided by the number of streams. essentially, they take all of the money that's brought in, and then they pay it out based on the total number of streams. so to answer your question, yes, she is paid per stream. and she's paid on the ad-supported service as well, it's just that the rate is a lot lower. >> host: jim philips. >> so there are also a number of agency-led efforts, for instance, the department of justice is looking at the ascap and bmi consent decrees and the copyright royalty board's going through some of its rate-setting proceedings for different types of music streaming and other performance venues. so to what extent is that going

to, would the results of those proceedings kind of change the status quo? >> guest: well, i think that, again on the publishing side which is where ascap and bmi sit, there's been some concern perhaps that side is at a disadvantage if you're taking sides, if you will, because they are overregulated. i think part of that review of the consent decree is to look at whether or not there can be a more fluid system for licensing on the music publishing side, and i know there's also been a move to have more parity in the rate setting between music publishing and the sound recording side. >> host: why is it that sirius, pandora, spotify, am/fm, they all have different, different ways of either not paying or paying for music? >> guest: well, i think that a lot of that is set up by the

copyright act, and a lot of it is set by the copyright royalty board. so the copyright royalty board is a tribunal that's appointed by the library of congress and the register of copyrights. there are a group of three judge,ing and they look at copyright royalty rates, and they end up setting -- they listen to all the different interested parties, and they end up trying to set a royalty rate that they feel fairly represents the compensation that is deserved for the performance of the music. and, you know, the copyright royalty board only gets involved in certain situations. so the amount of money that a record label is able to negotiate to be paid from spotify is not touched by the copyright royalty board, yet the rights that pandora pays are. so, you know, again, you look at kind of a fractured system where some of it's regulated and some

of it's not, and i think that's been a lot of the argument over the past few years. >> host: professor bagger field, in your report -- bagger field, you reprint the u.s. copyright office recommendations, and one of those is full federal protection for sound recordings made prior to february 15, 1972, closing an unjustifiable loophole in copyright legislation. what's magic about february 15, 1972? >> guest: so sound recordings that came about prior to that date currently have no federal copyright protection due to, basically, a loophole in the way that the legislation was enacted. so i think maria and her group when they put out the copyright music licensing report earlier in the year acknowledged that and said this is something that should be updated. there shouldn't really be a difference in copyright

protection for a song that was written and recorded in the 1960s versus one that was written and recorded in the 1980s. >> host: how do you see the role of the apples and the 400-plus authorized music services that are available? >> guest: well, i think that, you know, one of the big takeaways from our report is really that the technological back end of the music business has not caught up with the technological front end of the music business. so we've moved to an era where spotify is really a technology company. they're not a music company, they're a technology company that distributes music. they have been really -- i mean, they were started in 2008. they've been built on cutting edge technology, on new technology just by virtue of the age of the company, and they are, they have to report their plays and their streams to record labels and publishers that have been in existence for a long time, and the standard setting and the formats in which

the digital services are required to report, there really is not a lot of standardization across the board. spotify reports in different formats to each of the three major labels and publishers and other different formats to aggregator services like tune corps. and there have been some initiatives. there's ddex that's tried to set some standards for the sharing of data or the distribution of royalty data. but i think that was really one of the biggest takeaways from our report, which is that there is a tremendous challenge of a lack of technological back end to support these services. and going back to my comment a little bit earlier about everything is trackable these days, i think there really needs to be a bigger move x that is one of the recommendations we make in the report, to implement better technologies to track that payment from the time the listener listens to the music on spotify in the u.s. or sweden or

japan or whether they're using the streaming service to the writer or the musician. >> host: well, the music industry is in transition in this digital era. this is something that the library of congress, the department of justice, the u.s. copyright office and the u.s. congress are all involved in. alan bargfrede is the executive director of rethink music. they've come out with a new report on transparency and payment flows in the music industry. thanks for for being our guest n "the communicators." >> guest: thanks so much for having me, guys. >> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> this new year's weekend booktv brings you three days

of nonfiction books and authors. on new year's day, encore presentations of "in depth," starting at 7 p.m. eastern. nationally syndicated talk show host tom hartman on his life and career. his many books include "the crash of 2016," "rebooting the american dream," and "threshold. then at 10 p.m., economist warter williams -- walter williams. saturday evening at 10 p.m. eastern on "after words," karl rove -- former white house deputy chief of taffe -- looks at william mckinley's 1896 campaign in his new book. mr. roe -- rove discusses the political environment in 1896 including mckinley's expansion of the republican base. >>